Trust in FSIs hits new low, customers seek alternatives
Trust in Australia’s financial services industry has taken a battering, with nearly one in three customers revealing their confidence in the industry has deteriorated significantly, according to a recent survey by Deloitte and Salesforce.
As revealed in the Restoring trust in financial services in the digital era survey released at the end of July, more than one in five customers revealed they have zero trust in the financial services industry, with banks rated the least trusted sector within the industry – 29 per cent of respondents claimed banks were extremely or quite untrustworthy, followed closely by insurers at 23 per cent.
Worse still for the incumbents, almost half (47 per cent) of those surveyed do not trust their existing financial services provider.
The study attributes the growing trust deficit to a series of industry shocks over the last 12 months, including numerous high-profile cybersecurity breaches, ongoing concerns around the forthcoming open banking launch, crucially, the fallout from the Royal Commission into banking practices.
As a result, nearly half of all surveyed banking customers (48 per cent) said they would be open to switching to a fintech within the next two years. Worse still for incumbent insurers, 59 per cent of customers said they would be willing to make the jump to their insurtech rivals, despite nearly half (46 per cent) of those surveyed revealing they are unaware of their existence.
“Today, the reputation of the financial services industry is in turmoil,” the survey authors said. “The Royal Commission has exposed significant failures of financial services providers including; failing to act in the best interests of customers, fraudulent documentation and breaches of responsible lending obligations.”
Despite an enviable reputation as among the most digitally progressive industries in Australia, a majority of surveyed customers said they were disappointed by their digital interactions with local FSIs. According to the survey, 53 per cent of customers believed their digital experience with financial providers was left wanting. Banks, nevertheless, outperformed all other FSIs in user experience ratings, meeting most – if not all – customer expectations 81 per cent of the time; insurers were the worst performers in the industry, failing to meet the expectations of 21 per cent of those surveyed.
Expectations from digital service are clearly growing, with customers demanding their institutions be present across their preferred digital channels. Nearly half (45 per cent) of those surveyed expect to be able to access customer service via text or social channels, while a quarter (24 per cent) believe it should happen within the next two years. Customers also revealed a clear demand for proactive advice and alerts, with one in four customers believing their financial services provider was failing to provide these services, despite an overwhelming 59 per cent of expecting this service from their financial providers today.
“Our survey reveals there are clear gaps in terms of what customers expect today and what firms are delivering. Greater personalisation, more proactive advice and alerts and more innovative products were key gaps in expectations,” the survey authors said.
To limit customer attrition, the survey authors advised financial services firms to “act quickly to address gaps in expectations, or risk churn.”
Conducted jointly by Deloitte and Salesforce, the study surveyed more than 1000 Australian consumers, covering digital expectations and penetration, and general perceptions of industry practices to date.